2021 (7) TMI 148 - Tri - Companies Law

Scheme of Amalgamation Approved, Effective April 1, 2019, Ensuring Compliance & Shareholder Rights

The petition for the Scheme of Amalgamation between two companies was allowed, with the Scheme being sanctioned and binding from 01 April 2019. The ... Sanction of the Scheme of Amalgamation - section 230(6) read with section 232(3) of the Companies Act, 2013 - HELD THAT:- Considering the submissions and considering the no-objection certificate issued by the RBI, the scheme is approved. Application allowed. Issues Involved:1. Sanction of the Scheme of Amalgamation under sections 230(6) and 232(3) of the Companies Act, 2013.2. Compliance with statutory requirements and accounting standards.3. Objections and representations from statutory authorities.4. Transfer of assets, liabilities, and obligations.5. Issuance and allotment of shares to shareholders.6. Continuation of legal proceedings post-amalgamation.7. Compliance with procedural formalities post-judgment.Issue-Wise Detailed Analysis:1. Sanction of the Scheme of Amalgamation:The petition was filed for the sanction of the Scheme of Amalgamation between Aditya Marketing & Manufacturing Private Limited (Transferor Company) and Umang Commercial Company Private Limited (Transferee Company) with the appointed date being 01 April 2019. The Scheme was approved unanimously by the Board of Directors of both companies on 23 January 2020. The amalgamation aims to combine the businesses for more convenient and advantageous operations, resulting in a larger entity with greater capacity to raise funds and reduce costs.2. Compliance with Statutory Requirements and Accounting Standards:The Statutory Auditor confirmed that the accounting treatment in the Scheme complies with section 133 of the Companies Act, 2013. No proceedings were pending under sections 210 to 227 of the Companies Act, 2013. The exchange ratio of shares was fixed based on a fair and reasonable basis by a registered valuer. Notices pursuant to section 230(5) of the Companies Act, 2013 were sent to statutory and sectoral regulators, and all statutory formalities were duly complied with.3. Objections and Representations from Statutory Authorities:The Regional Director (RD) and the Reserve Bank of India (RBI) filed their representations. The RD's observations included the need for compliance with section 232(3)(i) of the Companies Act, 2013, payment of stamp duty on the transfer of immovable properties, and compliance with Accounting Standards. The RD also noted that no complaints were received against the Scheme and that the RBI issued a 'No Objection' to the Scheme. The petitioners undertook to comply with all statutory requirements and addressed the RD's observations in their rejoinder affidavit.4. Transfer of Assets, Liabilities, and Obligations:All property, rights, powers, debts, liabilities, duties, and obligations of the Transferor Company were ordered to be transferred to the Transferee Company without further act or deed, pursuant to section 232(4) of the Companies Act, 2013. The Transferee Company will bear all liabilities and pending proceedings by or against the Transferor Company.5. Issuance and Allotment of Shares to Shareholders:The Transferee Company was directed to issue and allot shares to the shareholders of the Transferor Company as per the Scheme. The exchange ratio was determined to be fair and reasonable.6. Continuation of Legal Proceedings Post-Amalgamation:All pending legal proceedings, suits, and appeals by or against the Transferor Company were ordered to be continued by or against the Transferee Company as per the Scheme.7. Compliance with Procedural Formalities Post-Judgment:The Petitioners were granted leave to file the Schedule of Assets of the Transferor Company within three weeks. The Transferor Company was ordered to be dissolved upon filing certified copies of the order with the Registrar of Companies. The Petitioners were directed to supply legible printouts of the Scheme and Schedule of Assets to the department for verification. Due to the Covid-19 pandemic, the Registrar of Companies was directed to accept digitally signed copies of the order.Conclusion:The petition for the Scheme of Amalgamation was allowed, with the Scheme being sanctioned and binding from 01 April 2019. All statutory formalities were duly complied with, and the Scheme was found to be bona fide and in the interest of all concerned. The judgment ensured the seamless transfer of assets, liabilities, and obligations, and provided for the continuation of legal proceedings and issuance of shares to shareholders. The procedural formalities post-judgment were also addressed, considering the Covid-19 pandemic restrictions.